Former Bethlehem Steel property to idle

Struggling Sparrows Point plant in Maryland will lay off workers starting in June.

May 25, 2012

The owner of the financially ailing Sparrows Point steel plant is idling operations there, warning 1,975 workers Thursday that they would be laid off starting next month.

The news, which casts doubt on the future of the Baltimore County facility that was once owned by Bethlehem Steel, came as RG Steel is shopping the steel mill and its other assets to potential buyers.

RG Steel informed the Maryland Department of Labor, Licensing and Regulations that layoffs would begin June 4 and continue through June 18. The state said the company would be laying off 1,714 hourly and 261 salaried workers, losses that would be a significant blow to the economy.

For years, the plant has faced uncertainty before last-minute deals salvaged the mill. RG Steel is the latest owner to try to sustain steel production at the once-flourishing facility.

The property, which has stood on its Baltimore harbor site since 1887, was once owned by Bethlehem Steel, which spent more than $600 million building a cold mill and relining the blast furnace before filing for bankruptcy in 2001. The blast furnace became one of the biggest and most efficient in North America.

In a letter to United Steelworkers, RG Steel blamed an "immediate, unexpected liquidity crisis" for the shutdown as its lenders cut off credit to maintain operations. It said it did not know whether the idling would be temporary or permanent.

Joe Rosel, newly elected president of the United Steelworkers Local 9477, said he expects some workers would remain at the plant though he did not know how many. The total number of affected employees won't become clear until June 4, he said.

Characterizing the situation as "fluid and dynamic," Rosel said the union is working with RG Steel to find capital or a buyer for the company or its facilities.

"We've been through it before. Obviously, people are concerned," said Rosel, who has worked at Sparrows Point for 34 years.

Bette Kovach, an RG Steel spokeswoman, said steel-making operations at its other plants in Warren, Ohio and Wheeling, W.Va., also would be idled as the firm goes into "asset protection mode."

Once a thriving plant, Sparrows Point has struggled amid industry consolidation and competition from cheaper foreign steel. A series of owners have come and gone in recent years, yet Sparrows Point managed to survive despite being idled several times.

"I'm amazed … it's like the phoenix," said Marc Liebman, president of AIM Market Research, a Pittsburgh firm that provides research for steel companies and their suppliers.